"the Company was recently served with a complaint from Madison Square Garden with allegations including breach of contract and wrongdoing. The Company and its counsel have not yet conducted a comprehensive review of these allegations, but on a preliminary reading, SpongeTech believes the complaint to be without merit and intends to conduct a vigorous defense.

SpongeTech also announced that it has recently opted-out of its business affiliation with the New York Yankees. Cancellation of its advertising agreement with the New York Yankees was on an amicable basis and was in full compliance with the parties’ agreement. Statements that appeared in the popular press, to the contrary, are not accurate."

SpongeTech has previously said it will increase its national marketing budget to $20 million for fiscal year 2010, a 100% increase from last year. Last year, SpongeTech sponsored 28 MLB teams, NBA teams the Cleveland Cavaliers and New York Knicks, NHL teams the Chicago Blackhawks and New York Rangers, and eight NFL teams.